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NEW YORK — At a time when credit and debit card fees are under fire, American Express Co. said Wednesday it will no longer charge monthly fees on its gift cards.

The change will apply to cards currently in stores and even in people's wallets. Previously, a monthly $2 fee kicked in a year after the card was issued. Such inactivity fees are common among the gift cards on the market.

So if a gift card is left unused, that means a monthly fee would eventually deplete a card's value in most cases. American Express said the change isn't a response to the new gift card reforms passed as part of the sweeping credit card law earlier this year.

Starting in August 2010, that law will ban issuers from putting an expiration date on gift cards, unless it's at least five years after the card was loaded.

It's not clear whether a monthly fee's eventual depletion of a card's value would count as a de facto expiration date.

For instance, the new law also directs the Fed to review whether fee amounts for gift cards are appropriate. Right now, a flat monthly fee typically applies to gift cards regardless of the remaining value.

With regard to gift cards, the credit card law also:

Bans dormancy fees unless cards have been inactive for at least a year

Requires issuers to "clearly and conspicuously" state fees on packaging

Bans expiration dates that come five years before the card was issued or last used

How those regulations will affect the gift card industry is unclear.

The elimination of the monthly fee is not a reaction to the new law, said Alpesh Chokshi, president of global prepaid at American Express.

"There's no relation. We've wanted to take (the fee) away for years," he said. "We're simply listening to our customers."

American Express said most of its cards are used within a year, but it gets many customer complaints about the fee.

The upfront charge of between $2.95 and $6.95 will remain intact.

Gift cards have no doubt become an important revenue stream for American Express. After introducing them five years ago, the company says it now issues $1 billion in gift cards a year. And that figure is expected to grow this year, despite the recession, Chokshi said.

Despite the company's size, its elimination of monthly fees may not set off a trend.

Since Visa cards are accepted at more outlets, banks that issue Visa gift cards might not feel pressured to follow American Express' lead, said Linda Sherry, spokeswoman for Consumer Action, an advocacy group in Washington, D.C.

Chase, for example, starts applying a monthly $2.50 fee a year after the card is issued. It's $12 to replace a lost card. There is an upfront fee of $3.50 to buy the card.

Fees are a hot issue across the country and on Capitol Hill right now. Just last week, four major banks — Bank of America, JPMorgan Chase, U.S. Bank and Wells Fargo — said they were overhauling their overdraft programs. The move came after Sen. Chris Dodd, D-Conn., said he planned to introduce legislation that would bar banks from automatically enrolling customers into the programs.

Right now, they're automatically enrolled and can't opt out of the program.

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